Determinants of firms' investment behaviour: a multilevel approach

Kristine Farla

No 2013-055, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: This paper investigates micro and macro determinants of firms investmentbehaviour using firm data from 101 developing and emerging economies. Asubstantial number of firms in our sample does not invest in fixed capital or investslittle relative to sales revenue. Using a multilevel probit model we study what factors trigger investment and using a multilevel Heckman selection model we study what factors influence a firms investment to sales ratio. Although we find that bothmicro and macro determinants explain investment behaviour, firms investmentbehaviour is heterogeneous in nature and has little dependency on a countrysmacroeconomic setting. In addition, we find that, on average, firms which arecompletely foreign owned have a relatively lower investment to sales ratio. Finally,we find evidence which suggests that the probability of investing is higher for firmslocated in countries with more property rights protection and control of corruptionand we find some evidence which suggests that foreign owned firms located incountries with good institutions invest relatively more.

Keywords: Capital; Investment; Capacity; International Factor Movements and International Business; Macroeconomic Analyses of Economic Development; Microeconomic Analyses of Economic Development; Institutions and Growth (search for similar items in EconPapers)
JEL-codes: E22 F20 O11 O12 O43 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-bec, nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://unu-merit.nl/publications/wppdf/2013/wp2013-055.pdf (application/pdf)

Related works:
Journal Article: Determinants of firms' investment behaviour: a multilevel approach (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2013055

Access Statistics for this paper

More papers in MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) Contact information at EDIRC.
Bibliographic data for series maintained by Ad Notten ( this e-mail address is bad, please contact ).